Judge: Curtis A. Kin, Case: 20STCV27675, Date: 2022-12-08 Tentative Ruling
Case Number: 20STCV27675 Hearing Date: December 8, 2022 Dept: 72
MOTION TO QUASH SUBPOENA TO PERSON MOST KNOWLEDGEABLE
MOTION
FOR PROTECTIVE ORDER RE: SPECIAL INTERROGATORIES, SET ONE
Date: 12/8/22
(8:30 AM)
Case: Solomon Aflalo v. Farmers
Insurance Exchange et al. (20STCV27675)
TENTATIVE RULING:
Plaintiff Solomon Aflalo’s Motion to Quash Subpoena Issued
to Person Most Knowledgeable of SAIG Insurance Solutions, Inc. by Defendant
Farmers Group, Inc. (683235465737) is GRANTED IN PART.
Plaintiff Solomon Aflalo’s Motion for Protective Order (883097422079)
is DENIED.
I.
MOTION TO QUASH SUBPOENA
Plaintiff Solomon Aflalo moves to quash the subpoena issued
to the Person Most Knowledgeable of SAIG Insurance Solutions, Inc. (“SAIG”) by
defendant Farmers Group, Inc. (“FGI”). The matters for testimony indicated in
the subpoena are set forth below:
1. The name
and contact information for each tax preparer who
prepared and filed Saig Insurance Solutions’ tax
returns for each calendar year from June 7,
2013, to the present.
2. The name
and contact information for the person(s) who has possession, custody or
control of the tax returns filed
by Saig Insurance Solutions for
each calendar year from June 7, 2013, to the present.
3. The name
and contact information for the person(s) responsible for interacting with each
tax preparer regarding the preparation and filing of
Saig Insurance Solutions’ tax returns for
each calendar year from June 7, 2013, to the present.
4. The name
and address of the physical location at which Saig
Insurance Solutions’ tax returns for each calendar year from June 7,
2013, to the present are maintained.
5. The name
and contact information for the person(s) who has possession, custody or
control of the back-up documents for
each calendar year from June 7, 2013, to the present.
6. The name
and address of the physical location at which the back-up
documents for each calendar year June 7, 2013, to
the present are maintained.
7. The name
and contact information for the person(s) knowledgeable about the identity and
contact information for the vendors with whom Saig
Insurance Solutions has done business for each calendar
year June 7, 2013, to the present.
8. The name
and contact information for the person(s) knowledgeable about the identity and
contact information for the persons employed by Saig
Insurance Solutions for each calendar year June 7, 2013, to
the present.
(Reed Decl. ¶ 11
& Att. 2 to Ex. 1.)
With respect to the
subpoena to SAIG, plaintiff also moves for a protective order prohibiting
further like subpoenas and subpoenas to plaintiff’s tax preparer and accountant
until the Court has delineated the scope of discovery.
Plaintiff asserts
that the matters set forth in the subpoena are protected by the taxpayer
privilege. The California Supreme Court held that tax returns are
privileged and protected from forced disclosure in civil actions. (See Webb v. Standard Oil Co. of Cal. (1957)
49 Cal.2d 509, 513; Schnabel v. Superior
Court (1993) 5 Cal.4th 704, 721.) “The purpose of the privilege [against
disclosing tax returns] is to encourage voluntary filing of tax returns and
truthful reporting of income, and thus to facilitate tax collection.” (Weingarten
v. Superior Court (2002) 102 Cal.App.4th 268, 274.)
With respect to Matter Nos. 1-6, these matters seek the name
and contact information of SAIG’s tax return preparer (No. 1), the person or
persons who have possession, custody or control of SAIG’s tax returns (No. 2),
the person or persons responsible for interacting with the tax preparer
regarding the preparation and filing of SAIG’s tax returns (No. 3), and the
person or persons who have control of the documents used to prepare SAIG’s tax
returns (No. 5). FGI also seeks the name and address of the physical location
where SAIG’s tax returns and documents used to prepare SAIG’s tax returns are
located (Nos. 4 and 6).
Matter Nos. 1-6 are not protected by the taxpayer privilege
because they do not call for the disclosure of information in the tax returns
themselves. (See Best Products, Inc. v. Superior Court (2004) 119
Cal.App.4th 1181, 1190, quoting Hernandez v. Superior Court (2003) 112
Cal.App.4th 285, 294 [“[A] party has ‘no right to refuse to identify documents
in response to interrogatories, even if [it] may properly refuse to produce
them later, based upon a claim of privilege. [Citation]’”].) Documents
constituting an “integral part” of tax returns, such as W-2 forms that are
required to be attached to tax returns, are protected by the taxpayer
privilege. (Brown v. Superior Court (1977) 71 Cal.App.3d 141, 143.)
However, the information sought in Matter Nos. 1-6 do not form an integral part
of a tax return.
With respect to Matter Nos. 7 and 8, there is no dispute
about the relevance of these matters. On the face of Matter Nos. 7 and 8, there
is no mention of tax returns. Accordingly, Matter Nos. 7 and 8 do not warrant
the quashing of the subpoena.
For the foregoing reasons, plaintiff’s invocation of the
taxpayer privilege in seeking to quash the subpoena is unavailing.
With respect to plaintiff’s request for a protective order
as to further subpoenas, the Court notes that the taxpayer privilege is not
absolute. The privilege can be waived or is inapplicable in three situations:
“(1) there is an intentional relinquishment, (2) the gravamen of the lawsuit is
so inconsistent with the continued assertion of the taxpayer's privilege as to
compel the conclusion that the privilege has in fact been waived, or (3) a
public policy greater than that of confidentiality of tax returns is
involved.” (Schnabel, 5 Cal.4th at 721, internal citations and quotations
omitted.)
Nevertheless, the applicability of the taxpayer privilege to
discovery outside the matters set forth in the subpoena is not ripe. “The
ripeness element of the doctrine of justiciability is intended to prevent
courts from issuing purely advisory opinions. [Citation.] It is ‘primarily
bottomed on the recognition that judicial decisionmaking is best conducted in
the context of an actual set of facts so that the issues will be framed with
sufficient definiteness to enable the court to make a decree finally disposing of
the controversy.’ [Citation.]” (Wilson & Wilson v. City Council of
Redwood City (2011) 191 Cal.App.4th 1559, 1573.) Because the future
subpoenas have not been issued, the scope of testimony called for in those
subpoenas has not been sufficiently defined. Accordingly, the Court declines to
issue the requested protective order.
Even though the matters for testimony are not protected by
the taxpayer privilege, it is undisputed that the subpoena has not been served
on SAIG. (Reed Decl. ¶ 13.) The proof of service attached to the subpoena
indicates that the subpoena was served on counsel for plaintiff, but counsel
for plaintiff is not authorized to accept service on behalf of SAIG. (Reed Decl. ¶¶ 11, 12 & Att. 2 to Ex.
1.) Notwithstanding FGI’s assertion that plaintiff, SAIG’s agent for service of
process, is evading service of the subpoena, personal service of the subpoena
on SAIG, a nonparty, is required before SAIG is required to attend deposition.
(CCP §§ 2020.220(a), 2020.220(c), 2025.280(b).)
Due to failure to properly serve the subpoena on SAIG
Insurance Solutions, Inc., the motion to quash is GRANTED IN PART. The subpoena
to SAIG Insurance Solutions, Inc. issued by defendant Farmers Group, Inc. on
September 28, 2022 is hereby QUASHED.
II.
MOTION FOR PROTECTIVE ORDER RE: SPECIAL
INTERROGATORIES
Plaintiff Solomon Aflalo moves for the issuance of a protective
order relieving plaintiff from having to respond to defendants Farmers
Insurance Exchange et al.’s Special Interrogatories, Set One, Nos. 5-12, the
text of which is set forth below:
SPECIAL INTERROGATORY NO. 5.
IDENTIFY all tax professionals (e.g., accountants,
attorneys, etc.) YOU utilized in the course of operating YOUR Farmers insurance
agency since 2010.
SPECIAL INTERROGATORY NO. 6.
IDENTIFY all accounting professionals (e.g., accountants,
attorneys, etc.) YOU utilized in the course of operating YOUR Farmers insurance
agency since 2010.
SPECIAL INTERROGATORY NO. 7.
IDENTIFY all tax professionals (e.g., accountants,
attorneys, etc.) YOU utilized in the course of operating SAIG Insurance
Solutions, Inc. since its formation.
SPECIAL INTERROGATORY NO. 8.
IDENTIFY all accounting professionals (e.g., accountants,
attorneys, etc.) YOU utilized in the course of operating SAIG Insurance Solutions,
Inc. since its formation.
SPECIAL INTERROGATORY NO. 9.
IDENTIFY all DOCUMENTS YOU provided to any tax professional
for purposes of YOUR tax preparation for each tax year since 2010.
SPECIAL INTERROGATORY NO. 10.
IDENTIFY all DOCUMENTS YOU provided to any accounting
professional for services rendered to YOU since 2010.
SPECIAL INTERROGATORY NO. 11.
IDENTIFY all DOCUMENTS YOU provided to any tax professional
for purposes of tax preparation for SAIG Insurance Solutions, Inc. for each tax
year since its formation.
SPECIAL INTERROGATORY NO. 12.
IDENTIFY all DOCUMENTS YOU provided to any accounting
professional for services rendered to SAIG Insurance Solutions, Inc. since its
formation.
(Reed Decl. ¶ 14 & Ex. 2.)
Plaintiff maintains that Special Interrogatory Nos. 5-12
violate the taxpayer privilege or seek information necessary to violate the
taxpayer privilege. With respect to Special Interrogatory Nos. 5-8, which seek
the identification of tax and accounting professionals whose services plaintiff
utilized, these interrogatories do not seek information constituting an
“integral part” of tax returns, which would be protected by the taxpayer
privilege. (Brown v. Superior Court (1977) 71 Cal.App.3d 141, 143.)
Rather, defendants seek only the identification of individuals.
With respect to Special Interrogatory Nos. 9-12, which seek
the identification of documents provided to tax and accounting professionals
whose services plaintiff utilized, this information is not protected by the
taxpayer privilege. “[A] party has ‘no right to refuse to identify documents in
response to interrogatories, even if [it] may properly refuse to produce them
later, based upon a claim of privilege. [Citation.]’” (See Best Products,
Inc. v. Superior Court (2004) 119 Cal.App.4th 1181, 1190, quoting Hernandez
v. Superior Court (2003) 112 Cal.App.4th 285, 294.) Plaintiff may be
entitled to invoke the taxpayer privilege if defendants seek to discover the
contents of documents provided to tax and accounting professionals. (See
Brown v. Superior Court (1977) 71 Cal.App.3d 141, 143 [“Assuming Revenue
and Taxation Code section 7056 protects the returns themselves, it is
reasonable to conclude that it must also protect the information contained in
the returns”]. However, plaintiff may not refuse to identify the documents
specified in Special Interrogatory Nos. 9-12.
The motion is DENIED. Plaintiff Solomon Aflalo is ordered to
serve verified responses to defendants Farmers Insurance Exchange et al.’s
Special Interrogatories, Set One, Nos. 5-12 within fifteen (15) days hereof.